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The EASIEST Way To Double Your Construction Business Profit in 6 Months · Contractor Business Builder Podcast

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  There are ways to double your construction business profits in
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  just six months, although it's not guaranteed they are proven
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  to work. My client ban doubled his profit
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  in less than four months and another client of mine robbed
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  doubled his profit margins in just six months using the info
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  that I'm about to give you right now.
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  So in this video, I'm going to show you the easiest way to
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  double your profit without increasing your stress or
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  working 80 hour weeks. All right, the first method to
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  doubling your profits and your construction business is a
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  pricing change. Improve your pricing.
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  And I know you're probably thinking, well, that's just so
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  easy, that's so generic. But the truth is if you are
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  having 10% profit margins and you add an extra 10% of margin
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  on top of that, you've doubled your profits instantly,
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  essentially. And I know what you're going to
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  say, but then I'm gonna lose a bunch of jobs.
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  I hear this from every single contractor I talk to.
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  And I asked them, how do you feel about your pricing?
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  They always think they're on the higher side.
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  Even guys that I know are undercharging what their
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  competitors are charging, they still believe that they're on
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  the higher side. So that's often a mental block
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  of where you feel like you've been, you know, getting over the
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  head by clients so many times where they're like, oh, it's too
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  much. It's outside of our budget.
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  We went with somebody cheaper. Clients are gonna say that like
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  90% of the time, even when it's not true.
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  And even if that is the case, you're looking for clients who
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  are the right fit, who are going to be able to pay what you need
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  to charge in order to be and to have a good, solid, profitable
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  construction business. I'm going to be giving you some
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  tips on how to do that in just a second.
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  But to understand this, if you've got a, a new home, let's
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  say you know, 500,010% margin, you made $50,000, not bad, but
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  nothing to, you know, get too excited about.
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  But if you add an extra 10% margin on top of that, now
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  you're making $100,000 on that same project, a little more
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  exciting if you're like, well, I can't just raise my price 10%,
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  no margins, which is like a 12% markup and expect to still land
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  jobs. The truth is people are doing it
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  across the country. It is happening everywhere.
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  You have competitors in your market who are charging twice as
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  much and making twice as much profit.
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  Now, what you need to get in place to handle this is
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  increments. So if you think a 10% price
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  change is too much for you right now, do 5%.
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  Even a 5%, you know, margin increase is still gonna make you
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  an extra $25,000 on that project and put you in a much better
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  place. And then as you grow or as you
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  get more comfortable selling those types of jobs, you can
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  increase it slowly to 10%. Now, branding alone can help you
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  gain an extra 5 to 10% in margins because of the expected
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  value of your company. And you may be an amazing
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  company and do amazing work and have an amazing reputation, but
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  if people look online or they see advertising that you're
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  doing and it looks mediocre or it looks like a cheap
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  contractor, they're going to expect cheaper prices and
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  they're not going to want to pay you what you're worth.
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  The other thing is having a high converting sales process.
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  So a good pre construction sales process that you're bringing in
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  leads and converting them into clients through an iterative
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  process where they're making a small commitment to in the
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  preconstruction agreement and then you're moving them on into
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  the full construction contract. So having the right sales
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  process and the right branding can easily help you gain 5 to 10
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  percent extra margins without dropping your closing rate.
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  And even if you're closing rate drops slightly, it is well worth
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  the additional twice as much profit.
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  Because if you make twice as much profit per job, you need
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  half as many jobs essentially make the same amount of money
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  you are already. So I highly doubt your closing
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  ratio is going to drop by half just by raising your prices
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  slightly. Method #2 doesn't just double
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  your profit, also double s the amount of free time that you
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  have and removes stress from running your company.
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  And that is all about building systems.
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  So you may have the best crews, good reputation, best jobs in
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  town, but without systems, you're going to be stuck working
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  in your business instead of working on it.
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  Systems will double your profit by removing the amount of time
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  that you personally need to spend in your business.
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  Your time as a business owner, if you're doing anywhere, you
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  know a few $1,000,000 in revenue a year, you're an hour of your
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  time is worth thousands of dollars.
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  So you have to realize that every hour that you can save
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  your time by having good systems in place is going to increase
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  your profits a lot. And also the the amount of like
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  having to redo other people's mistakes, less mistakes by your
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  people. Just having efficiencies
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  throughout your business is easily going to help you
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  increase your margins by 5 to 10% just by not having to do
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  rework, having quicker training, getting more out of your people
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  and decreasing your stress so you can sell better jobs and
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  have better client relationships.
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  There's so many benefits to getting great systems in place
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  now. A 5% decrease in expenses
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  through efficiencies can mean easily 25 to 50% more profit at
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  the end of the day. I was mentioned it's not just
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  about the profit, it's also about the stress so decisions
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  can get made without you. Instead of a bunch of daily
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  phone calls of what do we need to do, or this material is late,
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  or you know, this client is asking about this.
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  You can provide a playbook and you can provide training and the
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  ability to delegate roles to help get that stuff off your
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  plate and enable and empower your people inside your business
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  to know what is the decision they can make and run with and
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  what is the decision that they need to bring to you.
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  And those decisions that they bring to you should become less
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  and less as you build better systems and have better
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  communication and controls in place, better quality control
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  with systems, just easier processes throughout your
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  business. It makes a world of difference
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  and gives you just a great feeling that you know things are
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  being handled well behind the scenes.
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  There's gonna be some checks and balances.
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  You're going to go to your weekly, monthly meetings and
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  check in with the odd client or or so.
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  But once you have a team that is performing through the systems
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  that you've enabled them with, your business is going to be a
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  magical thing and you'll get more profit with less stress.
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  I've seen it happen time and time again.
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  All you want to be thinking about when you're implementing
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  systems is how to get removing, like wasted steps and extra
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  fluff. There's often a lot of things
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  that people are doing that they're just ineffective because
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  they have old habits or it's old ways of doing things and they
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  don't really understand that there is a system or process or
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  better way of doing it. The other thing is automating.
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  There's so much great technology out there that a lot of
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  processes probably good. Twenty, 3050%, sometimes 100% of
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  the process can be completely automated and nobody even needs
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  to do it. This gets triggered through
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  natural things that they're already doing.
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  Method one and two are both the money that you charge and the
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  free time they engage. Method 3 is about money that
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  you've already earned but you're quietly giving away for free.
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  And that is the change order loophole.
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  There's a second profit centre on almost every job that you're
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  running right now and most contractors know about it, but
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  they don't want to touch it. And the reason they don't want
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  to do those change orders because they're scared to ask.
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  Now I understand you don't want to change order client to death
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  and be that contractor, but at the end of the day, if there is
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  legitimate scope change or the client is asking for upgrades on
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  a project, you could even prompt upgrades on a project.
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  There are ways that you can provide a better service, a
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  better end quality product to your client if they'll pay a bit
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  more. So any kind of legitimate change
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  order, make sure that you're charging for it and discuss this
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  with the client. Let them know why this is a good
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  benefit for them. If it's something inheritable,
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  the project that you're doing remodeling and there's some like
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  water damage or something from years past, of course, change
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  order. But on a new home build, there's
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  often a lot of upgrades or things they maybe haven't
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  considered. Or when you get into the build,
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  there's stuff that comes up, the clients walking through and
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  like, oh, it would be so nice to have this enable that.
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  Make sure you're providing an estimate for the additional
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  work, get it signed and then get a deposit for typically the
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  entire change order. If it's a massive change to the
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  project, maybe you're getting a deposit, but typically ask them
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  to pay for the change up front. That way you know you're going
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  to pay for it. It's not just a handshake kind
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  of deal with it later. The client is like, well, you
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  know, that's way more than I thought it would be.
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  And then you're at slides with each other, especially when you
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  have a lot of projects, you've got different project managers.
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  It's very easy for your guys to be doing extra work or just
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  taking care of things because they think it's the right thing
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  to do without realizing that you've just spent a bunch on
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  extra materials, on extra labour, on extra, you know,
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  communication with the client. That's just draining your
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  profits from the project that the client should be paying for
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  because it's a legitimate change or upgrade to their project.
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  Now, if you stack up the math on a typical project, there's
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  typically A5, maybe even 10% change in the scope or the the
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  price by the time you get to the end of the project, if you're
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  not charging properly for that, you could easily be draining
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  your margins 5 to 10% and there goes your profit.
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  So if you wanna make sure extra work is documented, your guys
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  are trained to identify, you know what might be extra work.
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  That alone could be an extra 25, fifty, $100,000 on a project
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  that's just getting drained away because no one is really
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  tracking it. And what you want to be thinking
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  about is make sure that you're giving an estimate for the
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  change with price that encapsulates that.
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  This is going to be a change in scope.
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  There's probably going to be some delays to it.
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  You've also got to put in the time from a project manager to
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  actually make the estimate to talk with the client.
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  There's administration. So there's additional things
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  besides just the materials and labour and your regular margins
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  that go into a change order. There's also the estimating and
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  management time that you want to make sure you're calculating to,
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  because I've seen this time again, where you may be charging
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  for project management time, but you're not putting that in the
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  change orders. And then you wonder why your
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  project manager took so long on a project.
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  Meanwhile, there's been like 3 major design changes and they've
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  spent, you know, an extra 20 hours or 30 hours just dealing
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  with the architect and the clients and giving them budgets
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  and all this stuff that you weren't charging for properly in
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  your change orders. So here's the recap for you.
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  You don't need to spend 80 hours working in your business every
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  week. Hire 10 more people or take on
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  riskier jobs just to double your profit.
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  What you need to do is charge 10% extra with a brand and sales
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  process to back it up. Two is build systems that will
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  save you a ton of time and improve efficiencies throughout
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  your business. And #3 stop doing change order
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  work for free. My client Rob used exactly this
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  and he went from -52,000 in profits who is unprofitable to
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  280,000 profit in one year. Ben in one year went from being
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  unprofitable -28,235 thousand in profit in a one year span.
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  You want to get one to one coaching to help you scale your
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  business and double your profits.
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  Click the link in the description to apply to work
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  with me. And if you want to see how I
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  scaled a construction company to 5 million in yearly revenue,
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  then watch this other video where I break it down for you.